bank secrecy

Lest we get caught up in the notion that Corona’s removal from office has delivered ‘a new dawn’ for public accountability, let us first attend to a few loose ends.

The Corona impeachment showed us as a nation both how to and how not to go about removing high public officers from their posts. The wrong way was summarised by the presiding officer, the Senate President himself who delivered the coup de grace to the former chief justice. In handing down his verdict, Senate President Enrile stated

I was personally frustrated by the loose and hasty crafting and preparation that characterized the presentation of the charges contained in the Articles of Impeachment. It seemed that the case was being built up only after the charges were actually filed (emphasis mine). The repeated recourse to this Court’s compulsory processes to obtain evidence which normally should have formed the factual basis of the charges in the first place further burdened and, at times, taxed the patience of this Court.

We have witnessed with disdain the indiscriminate, deliberate and illegal machinations of some parties who have been less than forthright with this Court in presenting dubiously procured and misleading documents which were spread to the media obviously to influence this Court’s and the public’s opinion.

And yet, despite these “underhanded tactics” employed by the prosecution, some would say that they were effective nonetheless. As Dean Tony La Viña wrote

(T)he conviction of Mr Corona was arrived at, not principally because of the evidence of the prosecution, but because of evidence that ironically the Corona defense presented…The prosecution however should be credited for presenting enough evidence to compel the defense to take the risks they did in presenting the Ombudsman and Mr Corona.

I would even go further than that by saying that without the intense trial by publicity and public vilification of the character of the former Chief Justice, Mr Corona would not have felt the need to come clean at the Senate. After suffering physically, mentally, emotionally and socially from the vehement campaign to shame him into capitulation, he was pressured to take steps to preserve the dignity of his public “face” that in the end led to his conviction.

The wrong way can be summarised by the phrase: the ends justify the means. Many from the bloc comprised of Enrile and six other independent senator-judges plus a pro-administration one in the person of Ralph Recto who were crucial to secure a conviction expressed concern and apprehension at the way this philosophy appeared to govern the pro-conviction side. Some of them had suffered at the hands of similar biased treatment during their political careers. Still they decided to settle the moral dilemma “in favour of upholding the law and sound public policy”.

What this episode in our history should teach us is that when the facts are presented in a manner so clear and convincing, nothing can prevent the right decision from being rendered even by those who are not allied with your cause. The administration had feared that if it had not acted hastily in passing the impeachment through the lower house that the Supreme Court would have been called on to intervene and prevent the case from prospering.

Such a course of action was resorted to by its enemies in the past. This is why in its estimation, the ends justified the means. But if it had built its case on solid evidence, which is eventually what happened in the course of the trial in a back-to-front sort of way, it would have had nothing to fear. Senate President Enrile reminds us that in the words of Dean La Viña the “Supreme Court cannot intervene because the decision would be based, not an on interpretation of law, but on a finding of fact”.

But if this case shows us how not to prosecute public officials we suspect of wrong-doing, its converse would provide a template for the right way to do it. It is in discussing this converse case that a few loose ends crop up. Let me enumerate them in passing.

The role of whistleblowers

The prosecution procured some evidence from an anonymous source tagged the “small lady” contained in a large brown envelope. Whistleblowers may or may not wish to reveal their identities as some of the information they reveal may have been illegally acquired or illegal to disclose as in this case, but wherever possible, they should be encouraged to come forward. Giving them protection through legislation which is currently pending would help in uncovering corrupt practices in the future.

Once these cases are reported and become part of the public domain, through “barbershop talk” or otherwise, the impeachment case demonstrates that it can then form part of a complaint filed with the office of the Ombudsman. In fact, the Ombudsman does not even need to wait for such complaints from concerned citizens to be filed. It can commence its investigation based on such reports.

The role of ‘freedom of information’

Public access to information particularly the sworn statements of assets, liabilities and net worth (SALNs) of public officials would be vital in mounting a challenge to the truthfulness and accuracy of such declarations. It would also be useful as the government seeks to make its use of resources more transparent to the public. Pending legislation could allow for greater availability and accessibility of such information.

Any private citizen with personal knowledge of certain assets owned by government officials could then compare it with what appears in their SALNs. Likewise, anyone with personal knowledge of transactions engaged in by any agency can compare it with the financial statements and specific records kept by that agency.

Any discrepancy or inconsistency can then be used as prima facie evidence to launch a public inquiry into the anomalous statement or transaction.

The role of the Ombudsman and AMLC

Perceptions of a witch hunt due to the orchestration of various public agencies including the Land Registration Authority, the Bureau of Internal Revenue and the Anti-Money Laundering Council to investigate the assets of the former chief justice and his family could have been avoided, if it had been handled by the Office of the Ombudsman. This office has the power to investigate all public officers, even impeachable ones.

The problem however arises in interpreting bank transactions provided by the AMLC in proving or disproving the entries in the sworn SALNs of public officials. The banks are only required to report transactions or flow of funds into and out of client accounts. What is required are the account balances to compare them with the items in the SALN which are a snapshot of the stocks of assets and liabilities at a given point in time.

On top of this, the AMLC can only provide reports to investigative agencies when the accounts in question are being suspected of being used as a vehicle for money laundering. Proposed amendments to the law governing the agency should allow this to be expanded to cover corrupt practices and tax evasion. Of course, the rights of the suspect will still be protected as a court order will still be required for such information to be handed over.

The role of bank secrecy waivers

We have seen how the veil of bank secrecy was almost lifted during the Corona impeachment trial. I say almost, because neither side chose to present any documentary proof from these accounts despite the execution of an absolute waiver. Given perceived inconsistencies between the SALN law and the Foreign Currency Deposits law, the coverage of the waiver executed by public officials when they file their SALNs became a contestable issue.

A few senator-judges highlighted the need for amending these laws to remove any ambiguity or inconsistency between them. In my view, the economic conditions now prevailing in the country no longer warrant absolute confidentiality for foreign currency deposits. While the impeachment trial was being litigated, the outlook for the country was upgraded to positive by one credit rating agency. The nation has also become a net creditor to the rest of the world. Inflation and interest rates have settled much lower than they were when the country experienced a debt crisis.

The rapid accumulation of foreign reserves from investments, exports and foreign remittances has strengthened the peso and put a lot of pressure on domestic firms who have had to compete with imports that are now cheaper due to the peso’s appreciation and on exporters whose products have become less competitive because of the same. It has also lowered the spending power of families who receive the bulk of their income from overseas remittances. The time has come to review the foreign currency deposit law to see whether the incentives provided there for maintaining local dollar accounts are still required or even desirable.

The role of surveys and public opinion

We have seen how public opinion polls were used to apply pressure on senator-judges to cast a vote that agreed with the majority as next year is an election year. The quasi-political nature of the impeachment trial meant that the sub judice rule was not applied. The prosecution, defence and judges were allowed to air their views, present their evidence to the media even prior to their appointed time in the court even when parties were warned not to parade their evidence outside the court room.

Somehow I feel this lack of restraint will force the Senate to adopt a different set of rules the next time around. Thankfully, only one senator, Vicente Sotto III, who experienced a voter backlash following the previous trial of former president Joseph Estrada, based his verdict on the views held by the majority according to the polls which were taken right after the prosecution had presented its case. The rest followed their conscience based on the evidence.

The subdued reception by Malacañang Palace of the verdict in which it stated that Mr Corona was “merely the public face of the things that ail our justice system” demonstrated that it had been chastened somewhat, and rightly so, by the admonitions of many senator-judges for fomenting public rage against the former chief justice. Luckily in this case, public pressure did not result in self-harm or death as it did with former defence secretary Angelo Reyes.

The role of trust

Finally, I would like to highlight the need for public trust in the system for dispensing justice. Many on the winning side of the argument are claiming that the outcome of the trial has restored a sense of faith in our institutions. That point is debatable, but let us take it at face value and assume that at least for those who are pronouncing it, that it is true.

One thing we should hope for is that the next time around, this renewed sense of public trust will prevent them from exercising underhanded tactics to advance their cause. Let us hope that next time around, they will have enough faith in the system to allow it to follow its procedures, allowing a preliminary investigation and preliminary trial through the responsible committees and agencies tasked with determining if there is probable cause for mounting a case.

If we are now to believe that the country has reached a level of maturity, that it can now trust in its democratic and judicial systems to deliver the right outcome regardless of the personalities involved, be they friend or foe, then perhaps in the future we ought to leave it to those systems to function as they were designed to and not try to over-ride them. None of these systems are perfect, of course. In fact no system based on human agency can be, but if we are to live under the rule of law, then we will have to trust in them.

With the impeachment trial now over, and with elections a little less than a year away, let us hope that all of these loose ends get tidied up.

As a public servant in Australia, I have personally seen how the Freedom of Information operates in the real world.

In the department where I used to work, a lot of commercial feasibility studies were processed and kept “in confidence” due to the sensitive nature of such deals. A colleague of mine used to handle FOI requests a lot. He would sometimes show me the redacted documents he would photocopy and send back in response to them. Sometimes nearly the entire text of the document would be blocked out due to the private or confidential nature of its contents, and the fact that it was not necessary to know these details to understand the measures being considered.

We were asked to operate by a code of ethics which mandated us to treat such confidential information with utmost care. We were told to maintain correspondences including electronic mail whether internal or external to our department that might be subject of an FOI request. This created disk space issues for us. We had to exercise discretion in determining if these correspondences were important and sensitive enough to require archiving.

Many of the requests would come from the media, but some would come from ordinary citizens. “Joe Blogs” we would call them. There have been a number of instances recently that demonstrate how FOI requests can influence public debate over contentious issues of the day. One request in particular revealed the Federal government’s preparedness (or lack thereof) in dealing with refugees arriving by boat and the lack of appropriate resources deployed to manage the centers for holding them while their applications for asylum were processed.

In a world where the technology exists for the state or as in the case of the News of the World large multinational corporations to spy on its citizens or persons of interest, the FOI is a good tool to make the access of information less asymmetric. Several things are worth noting with regard to this right to information though.

First is that any Freedom of Information Act has to be followed by or work alongside a Privacy Act. As of now, the Philippines neither has one nor the other. There are certain pieces of legislation that protect the privacy of rape victims and of children who are subject to the judicial system or maintain bank secrecy of depositors even from the government (which in my view needs to be lifted for tax purposes). There is also a bill on data privacy that has been flagged as a priority by the president. Nothing other than a very general clause in the constitution however enshrines the rights of citizens to maintain their privacy.

In the US, the FOI was initially a tool for citizens to gain access to their own personal records. In Australia as in the US, an FOI request can be declined if it would lead to an unreasonable disclosure of someone else’s personal information, medical records for instance. These must be obtained with the consent of the individual. Section 8 clause c provides an exception to the FOI when,

the information pertains to the personal information of a third party natural person, unless it forms part of a public record, or the third party is or was an official of a government agency and the information relates to his or her public function.

Rather than dealing with the issue of privacy piecemeal through disparate contexts, there should be a law that applies more broadly this right and what it entails. Furthermore, government departments and businesses in general must be required to have policies covering confidentiality. A privacy act would simply make confidentiality the default setting but allow clients to waive their rights or give permission for their details to be shared under certain conditions.

Second, just as the right to privacy is not absolute, the right to information is not absolute either. The state can surveil or search a private citizen’s residence or belongings under certain provisions. Citizens should also be granted access to information subject to certain caveats as well. None of these rights to request or deny information should be abused however. Judicial review of cases is made possible by the draft bill to ensure that this is the case. An information commission would also help set the proper guidelines as in the case of Australia.

Third, aside from preserving the confidentiality of third party or commercially sensitive information, the FOI bill also exempts the state from disclosing information when there is a national security risk or commercial risk involved (as in foreign negotiations), when it involves matters that are sub judice or when it involves anything obtained by Congress in executive session.

This list should also be expanded to include all deliberations undertaken by Cabinet. In the Westminster system, cabinet, not the prime minister, makes executive decisions. This makes policy making a collegial process. When cabinet is deliberating on an issue, its members should be free to express their views without fear of reprisal. This is sometimes referred to as the Chatham House Rule. In the Australian context, cabinet deliberations are kept confidential for a period of time. Although the presidential system works differently, the same principle can be applied.

The former Australian Prime Minister Kevin Rudd broke his silence recently and exposed the individual views of those within his “kitchen cabinet” on an emissions trading scheme that partially led to his downfall prior to the last election. His statement implied that his successor, the current PM Julia Gillard did not believe in the measure at the time it was considered. This has put her in an awkward position, as she tries to sell a similar scheme to a skeptical audience, something that the confidentiality of Cabinet is meant to shield its members from.

Returning to my original point about seeing the FOI in action, I have to say that in practice, it hardly interferes with the way we conduct business in the public sector, which should provide reassurance to those that fear it being enacted. As someone who works “on the other side of the fence” I would still have to endorse the Freedom of Information particularly because it does aid in making government more transparent.

Sometimes, bureaucrats have their hands tied behind their backs and are unable to speak out or question openly the policies of their political masters. It helps sometimes to have citizens doing their part, advocating changes and seeking clarification on measures undertaken to support a given policy agenda. Towards that end, the FOI in practice has been a very helpful tool.

The ProPinoy Project

The ProPinoy Project is a Global Community Center for all things Pinoy, to connect Filipinos at home and abroad by creating a space for ideas, trends and analyses about the Philippines and the global Pinoy community to inspire informed discussion and transformative action.

The ProPinoy Project is a Global Community Center for all things Pinoy, to connect Filipinos at home and abroad by creating a space for ideas, trends and analyses about the Philippines and the global Pinoy community to inspire informed discussion and transformative action.